Cascade Engineering Gambles On HeavyDuty Truck Rebound

May 14, 2002
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GRAND RAPIDS — The acquisition of a large plant in Ohio will bring Cascade Engineering into the medium- and heavy-duty truck business, a sector the plastics-molding company hopes will soon rebound and help it achieve aggressive growth targets through the end of the decade.

Cascade Engineering hopes the manufacturing of plastic components for medium- and heavy-duty trucks will generate annual revenues of $75 million to $80 million within five years, President and Chief Operating Office Mike Valz said.

The Grand Rapids-based Cascade Engineering generated revenues of $215 million in 2001 and has set an aggressive goal of becoming a $1 billion corporation by 2010, Valz said.

“This is a very important market segment,” Valz said of Cascade’s entry into medium- and heavy-duty trucks. “This initiative is consistent with our goal of expanding our capabilities and reaching new markets.”

The purchase agreement between Cascade Engineering and Clarion Technologies Inc. for the 164,000-square-foot Montpelier, Ohio, plant was the result of a “simultaneous equation” of events.

Cascade Engineering, a maker of plastic components for the automotive, furniture, consumer goods and container industries, was looking to grow its product line and required large press capabilities. Executives were visiting Clarion’s Ohio plant to learn about the segment when they learned the financially struggling company might have an interest in selling.

Subsequent conversations led Cascade Engineering to form CK Technologies, a joint venture with the plant’s general manager, and sign a purchase agreement on April 10 to buy the plant for $12.3 million and about $750,000 in net working capital.

Keys to the deal are a strong management team in place in Ohio, Cascade’s experience in the industry and a belief that it can eventually leverage efficiencies with the plant and its existing manufacturing operations, Valz said.

The market for medium- and heavy-duty trucks is a “natural fit with our experience and expertise,” he said.

The acquisition, through the large presses in place in Montpelier, provides Cascade manufacturing flexibility that it didn’t have before. While the company is “betting” on the acquisition, given the current state of the medium- and heavy-duty truck industry that has been hit hard by the recession, Cascade believes the sector will turn around within a year and make the benefits of the deal outweigh the risks, Valz said.

“We can bring some new thinking to light there and help the customers,” he said. “All of these pieces, when you add it up — it was worth it.”

The plant, employing 70 people, has plastic injection-molding machines ranging from 950 to 5,000 tons. Clarion Technologies completed construction of the plant in 1999 at a cost of $17.3 million.           

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